29 May 2007

Celebrate Tax Freedom Day on 1st June (Consumer)

 

While today may seem to many as just a normal 1st June, UK taxpayers have reason to celebrate a special day – Tax Freedom Day. Tax Freedom Day, marks the theoretical point in the year at which we stop working for the government and start working for ourselves*.

But Unbiased.co.uk, the organisation promoting the benefits of independent financial advice, is urging individuals to take action and reduce the amount of tax they pay each year and therefore to bring their Tax Freedom Day forward. And with an average of £160 wasted on unnecessary tax liability per person this year**, it seems action is urgently needed.

David Elms, Chief Executive of unbiased.co.uk commented “Tax Freedom Day is a key date in any UK taxpayer’s diary as it highlights just how much we pay into the taxman’s pockets each year. But there are many ways in which we can reduce our tax liability. Our research shows that the UK as a whole wastes a whopping £7.9 billion in unnecessary tax payments each year – so why not take action now and make sure that your finances are as tax efficient as possible?

“Everyone can take action to bring their personal Tax Freedom Day forward and the best thing is there is help at hand in doing so. Why not find an independent financial adviser in your area, who will be able to review your financial situation to ensure you only pay the tax you have to!”

IFA Promotion’s annual TaxAction** campaign, now in its fifteenth year, reveals that the UK as a whole will waste £7.9 billion this year in unnecessary tax. That’s enough to create a new millionaire every day for the next twenty years! However, despite 27 million (62%) of us claiming to resent rising tax bills, nearly three quarters (74%) admit to doing nothing to help reduce the amount they pay.

By taking just a few simple steps we could stamp out this tax wastage for good:

 

  • IF YOU HAVE ASSETS OVER £300,000: Plan your inheritance - an extra £1.6 billion could go to chosen heirs by planning properly to avoid IHT liabilities. IHT is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.

  • IF YOU SAVE: Use up your annual ISA allowance - £382 million in tax could be avoided by sheltering investments in ISAs, or moving savings from an ordinary deposit or savings account to an ISA. Also consider a Friendly Society savings account or products from National Savings & Investments as tax-efficient savings options.

  • IF YOU ARE ELIGIBLE: Claim your tax credits - £2.3 billion of ‘free money’ is up for grabs from HMRC and the DWP, in the form of Pension Credits, Child Tax Credits and Working Family Tax credits.

  • IF YOU FILL IN A TAX RETURN: Sort out your self-assessment - £463 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. Self-assessment forms received after the deadline incur penalties of £100; further penalties and errors make up the balance of tax wasted in this way.

  • ALL TAXPAYERS: Maximise your personal tax allowances - £546 million goes begging each year, £322 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further £224 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.

  • IF YOU SAVE: Top up your pension pot - £739 million could be spared by optimising contributions to personal or company pension schemes, or making Additional Voluntary Contributions.

  • IF YOUR EMPLOYER OFFERS AN EMPLOYEE SHARE PLAN: Take advantage of it - £171 million is up for grabs for the estimated 600,000 staff currently in Profit Related Pay schemes.

  • IF YOU HAVE CAPITAL GAINS: Use your allowance efficiently, perhaps by transferring assets between spouses to make the most of both of your CGT allowances - £510 million could be saved in this way.

  • IF YOU GIVE TO CHARITY: £1 billion more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, Gift Aid or payroll giving.

  • IF YOUR CHILD OR GRANDCHILD IS ELIGIBLE FOR A CHILD TRUST FUND: Avoid waste byusing up the tax free saving potential - £125 million in tax could be saved every year.

    As a first step to stamping out this waste, visit IFA Promotion’s dedicated website at www.taketaxaction.co.uk.  The site contains tips on how to save tax, an online tax wastage calculator, and a guide to saving tax. You can also find details of local IFAs on the site or by calling 0800 085 3250.

    -ends-


     

    * Tax Freedom day is a floating date calculated every year (from 1st January) by the Adam Smith Institute: see www.taxfreedomday.co.uk for details.

    ** TaxAction 2007 was produced for IFA Promotion by RAKM, and is partly based on a specially commissioned analysis of Inland Revenue data combined with other sources such as the Family Resource Survey.

    For further information please contact:

    David Elms

    Nicola Hussey/Anna Schirmer

    Chief Executive

    Lansons Communications

    Unbiased.co.uk

    020 7566 9718/ 020 7294 3605

    020 7833 3131

     

    For expert comment or case studies from over 200 media-friendly IFAs, journalists should call unbiased.co.uk’s Media Services hotline on

    020 7294 3682 or search online at www.unbiased.co.uk/media

    1.      Independent Financial Adviser Promotion

    Unbiased.co.uk is the consumer brand of IFA Promotion, the organisation established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents around 9,000 firms of independent financial advisers across the UK, incorporating over 17,000 registered individuals. These individuals hold over 20,000 incremental qualifications which are each individually verified by the awarding body. IFA Promotion welcomes the prominent display of incremental qualifications and further developments into the credentials of independent financial advice.  

    IFA Promotion is sponsored by 29 leading financial institutions, and in the past 12 months, over 600,000 consumers and businesses used unbiased.co.uk to find local independent financial advice.

    IFA Promotion believes Independent financial advice should be:

    • Affordable. The option to take independent financial advice should be available, by right, to all- not just the wealthiest in society.

    • Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.

    • Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.

      2.      Independent Financial Adviser Promotion’s sponsors

      Aberdeen Asset Management

      London Mortgage Company

      Abbey

      Lincoln Financial Group

      AEGON Scottish Equitable Plc

      Mortgage Express

      Alliance Trust

      National Savings & Investments

      AXA Life

      New Star Investment Funds

      Bright Grey

      Norwich Union Life

      BUPA Health Services

      Prudential

      Canada Life Ltd

      Scottish Life

      The Children’s Mutual

      Scottish Life International

      Clerical Medical Investment

      Scottish Widows Plc

      Defaqto

      Skandia UK Group

      Friends Provident

      Standard Life Assurance Company

      Tomorrow

      Unum

      Invesco Perpetual

      Zurich Intermediary Group

      Legal & General

       

      Registered Office: IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606

         

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